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WACOG
Weighted Average Cost of Gas (WACOG) is the average cost per unit of natural gas, accounting for quantities and prices of multiple purchases or deliveries.
For example, if a utility buys 1,000 MMBtu at $3 and 2,000 MMBtu at $3.50, the WACOG helps determine the blended cost for accounting, pricing, and hedging purposes.
WACOG is critical for financial reporting, rate-setting, and cost management. Traders, analysts, and procurement managers use it to assess profitability and make informed supply decisions.
Understanding WACOG allows companies to optimize purchasing strategies, evaluate operational efficiency, and manage price exposure in energy markets.